Heed the fine print on credit card offers

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Considering banks give their best customers a 3% interest rate, known as the prime rate, a credit card offering a 1.9% interest rate for nine months cash advances or outstanding balances transferred seems like a deal.

Credit card traps that new applicants can fall into

Not understanding the fine print — While transferring credit card balances to new lower interest cards is a great way to pay down a lingering debt, the special transfer rate often only applies only to balances transferred from other cards. Any new purchases will be charged full interest.

Paying for add-ons like credit card insurance – This product is meant to cover credit card payments for a limited time if the cardholder is unable, but it is often tacked on without their knowledge. Keep a close eye on statements and question any charges for extra services.

Not asking for a lower rate — If you have good credit and payment history, lenders may offer you a preferred rate for your business — but only if you ask for it.

Using cash advances — There is no grace period on charged interest, it begins to accumulate as soon as the purchase is made.

Source: Ratesupermarket.com

 

Just one thing. There’s a little footnote beside that 1.9% showing the rate actually jumps to almost 22% if you don’t pay it off in those nine months. That 22% is higher than most credit cards charge, even if the deal comes with no annual fee and a bunch of reward points.

There are literally hundreds of credit cards in Canada offering everything from teaser introduction offers to permanent low credit card rates to rich reward offers. Wading through them all is the real chore and requires attention to detail.

“It really depends on each person. If you travel a lot, a travel rewards card might be better. If you do most of your spending on cash and groceries you want the card that offers the most cash back on that,” said Kelvin Mangaroo, president of RateSupermarket.ca, which did a full study of the benefits of various cards available on its web site.

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